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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
April 2014:
Telecommunications:
Projects and Policies Related to Deploying Broadband in Unserved and
Underserved Areas:
GAO-14-409:
GAO Highlights:
Highlights of GAO-14-409, a report to congressional requesters.
Why GAO Did This Study:
Broadband service provides users with many opportunities to improve
communications and broadband deployment is particularly critical in
rural areas to provide advanced communications to remote users and
communities. In 2010, FCC estimated that 7 million U.S. housing units—-
about 5 percent of the nation's housing units—-did not have access to
wireline broadband service, mostly in rural areas. Some
municipalities, cooperatives, and non-traditional private providers
are exploring ways to sponsor and fund broadband projects in unserved
and underserved areas.
GAO was asked to provide information on options for broadband
deployment in unserved and underserved areas. This report examines (1)
what is known about the alternative approaches unserved and
underserved areas have used to deploy broadband and some factors
considered in deployment decisions; (2) stakeholders' views on
broadband deployment in unserved and underserved areas; and (3)
efforts FCC has undertaken to foster broadband deployment in unserved
areas. GAO reviewed relevant documents and interviewed FCC officials,
representatives from industry, and incumbent providers. GAO also
conducted an in-depth review of 21 geographically dispersed broadband
projects selected to include various sponsor types, such as
municipalities, non-traditional private providers, and cooperatives,
and various ownership and financing approaches. GAO provided FCC with
a draft of this report for comment. In response, FCC provided
technical comments, which have been incorporated as appropriate.
What GAO Found:
The unserved and underserved areas that GAO reviewed used alternative
approaches and considered various factors to deploy broadband.
Broadband project sponsors in those areas included municipalities, non-
traditional private providers, consortiums of sponsors in a region,
and cooperatives. In making broadband deployment decisions, project
sponsors said they considered diverse factors related to their ability
to fund successful projects, such as the (1) likelihood of near-term
service upgrades by incumbent providers, (2) potential demand for new
services, (3) potential broadband technologies, and (4) existing
infrastructure and potential local assistance available to providers.
For financing approaches, some project sponsors used local private and
public funds while others leveraged federal funds. In addition,
project sponsors used a variety of ownership structures that ranged
from public ownership to local private investors.
Stakeholders and project sponsors GAO contacted cited economic, legal,
and policy concerns in deploying broadband in unserved and underserved
areas. For example, regarding funding, stakeholders said that remote
areas generally face high broadband deployment costs due to the
expense of deploying technologies over long distances or difficult
terrain and that often the return on investment is low since there are
relatively few potential subscribers in those areas. Project sponsors
and industry experts noted legal concerns, including concerns with
laws in some states that limit or ban companies that are not
telecommunications companies from deploying broadband due to concerns
about unfair competition. For example, in Louisiana, a city official
GAO contacted said state laws bar any municipality from deploying
broadband directly to consumers, so the city is planning to build and
own a fiber-optic network, but to comply with the state law, will not
offer retail service. Stakeholders also noted several policy concerns,
including concerns over the accuracy of federal broadband-mapping
efforts and whether the Federal Communications Commission's (FCC)
broadband-speed benchmark is set high enough. While there may be
valuable lessons in the examples profiled in our case studies, their
limited number does not allow us to generalize findings to the broader
universe of all entities seeking to deploy broadband networks.
FCC has several efforts under way to increase broadband deployment in
unserved areas, efforts that help address the economic and policy
concerns raised by stakeholders. FCC established the Connect America
Fund in November 2011 to support voice and broadband access in areas
where no private business case exists to provide broadband—one of the
key challenges these areas face in deploying broadband. Additionally,
in January 2014, FCC adopted an order in which it stated that it will
solicit proposals from non-traditional providers, including utilities
and municipalities, to deploy broadband technologies in rural, high-
cost areas. Through this effort, FCC plans to explore broadband policy
issues and gather information on viable business models for deploying
fiber-optic or next-generation wired technology in rural areas. FCC
plans to also gather information on the conditions under which rural
consumers would prefer next-generation wireless services over wireline.
View [hyperlink, http://www.gao.gov/products/GAO-14-409]. For more
information, contact Mark Goldstein at (202) 512-2834 or
goldsteinm@gao.gov.
[End of section]
What GAO Recommends:
Contents:
Letter:
Background:
Unserved and Underserved Areas Used Alternative Approaches and
Considered Various Factors to Deploy Broadband:
Stakeholders Cited Economic, Legal, and Policy Issues in Deploying
Broadband in Unserved and Underserved Areas:
FCC Has Undertaken Various Efforts to Foster Broadband Deployment in
Unserved Areas:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Selected Information on Broadband Projects in 21 Case
Study Areas:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: List of Telecommunications Industry Stakeholders Interviewed:
Table 2: Attributes of Broadband Projects in 21 Case Study Areas:
Table 3: Selected Examples of Wireline and Wireless Broadband
Technology and Speeds for Alternative and Existing Networks:
Figure:
Figure 1: Broadband Technologies and Examples of Applications
Performing at Various Speeds:
Abbreviations:
4G: fourth generation wireless:
BTOP: Broadband Technology Opportunities Program:
DSL: digital subscriber line:
EC Fiber: East-Central Vermont Community Fiber-Optic Network:
ETC: eligible telecommunications carrier:
FCC: Federal Communications Commission:
Gbps: gigabits per second:
kbps: kilobits per second:
LTE: Long Term Evolution:
Mbps: megabits per second:
NRTC: National Rural Telecommunications Cooperative:
NTIA: National Telecommunications and Information Administration:
Recovery Act: American Recovery and Reinvestment Act of 2009:
RUS: Rural Utilities Service:
USAC: Universal Service Administrative Company:
USF: Universal Service Fund:
UTOPIA: Utah Telecommunication Open Infrastructure Agency:
[End of section]
United States Government Accountability Office:
GAO:
441 G St. N.W.
Washington, DC 20548:
April 23, 2014:
The Honorable Henry A. Waxman:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Anna G. Eshoo:
Ranking Member:
Subcommittee on Communications and Technology:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Edward J. Markey:
United States Senate:
Broadband Internet service provides users and their communities with
many opportunities to improve communications, including enhancements
in e-commerce, telemedicine, and educational tools, and can drive
economic growth, productivity, and innovation. Broadband is
particularly critical to provide advanced communications to remote
communities and offer rural Americans new ways to participate in our
economy and society. The American Recovery and Reinvestment Act of
2009[Footnote 1] (Recovery Act) directed the Federal Communications
Commission (FCC) to develop a national broadband plan to ensure every
American had access to broadband service. In March 2010, FCC issued
the National Broadband Plan that included a centralized vision for
achieving affordability and maximizing use of broadband to advance
community development, health care delivery, education, job creation,
and other national purposes.[Footnote 2]
Throughout most communities in the United States, cable and telephone
companies have upgraded their networks or deployed new technologies to
provide broadband services to their customers. Nevertheless, in 2010,
FCC estimated that 7 million of the 130 million American housing units
did not have access to wireline broadband service.[Footnote 3] Most of
those who lack access live in rural areas where low population density
makes expanding cable and telephone networks considerably more
expensive than in urban areas. FCC estimated in 2010 that it would
cost $23.5 billion to reach all unserved areas, of which $13.4 billion
would be needed to just reach the most remote 250,000 households.
[Footnote 4] Furthermore, deployment costs vary according to the
broadband technology and type of construction used. For example,
according to FCC, the costs for new fiber construction can range from
$11,000 to $24,000 per mile for aerial construction to $25,000 to
$165,000 per mile for buried construction.
In this report, we refer to areas that lack broadband as "unserved,"
and areas that have access to low quality broadband service and may
have some households without access as "underserved." In some unserved
and underserved areas, entities other than traditional telephone or
cable Internet service providers--such as municipalities, non-
traditional private providers, consortium of sponsors in a region, and
cooperatives--are exploring ways to sponsor and fund broadband
projects. However, these entities face a range of challenges in
deploying broadband in unserved and underserved areas.
You asked us to provide information on options for broadband
deployment in unserved and underserved areas. This report examines (1)
what is known about the alternative approaches unserved and
underserved areas have used, or attempted to use, to deploy broadband
and some factors considered in broadband deployment decisions; (2)
stakeholders' views on broadband deployment in unserved and
underserved areas; and (3) efforts FCC has undertaken to foster
broadband deployment in unserved areas.
To address these objectives, we conducted a review of relevant
published literature and interviewed FCC officials and a broad array
of stakeholders from 40 organizations, including associations
representing consumers and industry, broadband consultants and
providers, and officials from local agencies in selected areas where
broadband projects were deployed or attempted. In selecting industry
experts and incumbent providers, we considered relevant published
literature and stakeholders' recommendations. We conducted an in-depth
review of 21 broadband projects, selected because they were
geographically dispersed and included various sponsor types, such as
municipalities, cooperatives, economic development agencies often in
regional consortiums, or private companies. For the 21 projects, we
reviewed the broadband options that project sponsors considered and
factors affecting their decisions. We interviewed project sponsors to
obtain their views on economic, legal, and other issues they believe
affected their ability to deploy a network. The economic, legal, and
other issues identified by project sponsors should not be viewed as
identifying all issues that could affect broadband deployment in
unserved and underserved areas; however, project sponsors consistently
raised the issues presented. Also, the economic, legal, and other
issues that we report on should not be viewed as being representative
of all entities deploying broadband in unserved or underserved areas.
We also interviewed incumbent providers on their views of
municipalities and cooperatives providing broadband service. We
interviewed industry experts, incumbent providers, project sponsors,
and stakeholders about FCC's efforts to facilitate broadband
deployment in unserved areas and what further actions, if any, FCC
might take. Further details of our scope and methodology are provided
in appendix I.
We conducted this performance audit from May 2013 to April 2014 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
Broadband allows users to access information via the Internet through
one of several high-speed transmission technologies. Broadband
capacity, typically referred to as "speed," is described in download
and upload capabilities and is measured by the number of bits of data
transferred per second and include kilobits (1 thousand bits per
second--kbps), megabits (1 million bits per second--Mbps), and
gigabits (1 billion bits per second--Gbps). Download speed refers to
the rate at which data is transferred from the Internet to the
consumer. Upload speed refers to the rate at which data is transferred
from the consumer to the Internet.
A range of broadband technologies provides high-speed Internet access.
* Digital subscriber line (DSL) service is delivered by local
telephone companies over upgraded copper-wire telephone networks that
were originally built to provide traditional wireline voice service.
* Cable modem service is delivered by cable television companies
through the same coaxial cables that deliver sound and pictures to
television sets.
* Fiber-optic lines are a wired technology that converts electrical
signals carrying data into light and sends the light through
transparent glass fibers about the diameter of a human hair. Telephone
companies provide most fiber-optic broadband service.
* Satellite is a wireless technology that transmits data using a
subscriber's receiver dish and a satellite in a fixed position above
the equator.
* Other wireless services, such as Long Term Evolution (LTE)--a
commercial data standard for wireless technologies--use cellular radio
links for consumers to access the Internet using their smart phones,
tablets, and other portable devices.[Footnote 5]
Broadband speeds vary significantly depending on the particular type
of service provided and may range from as low as 256 kbps to 1 Gbps.
[Footnote 6] In 2010, the National Broadband Plan stated that every
household and business in America should have access to affordable
broadband service with a speed of at least 4 Mbps download and at
least 1 Mbps upload. In 2011, FCC adopted this 4 Mbps/1Mbps benchmark
for broadband projects to be eligible to receive universal service
support.[Footnote 7] The federal benchmark allows for such Internet
applications as accessing websites, emailing with attachments like
pictures, and simple video conferencing, but does not support some of
the newer Internet applications that require faster speeds to use, as
shown in figure 1. For example, applications such as distance
learning, telecommuting, and telemedicine, which can involve
transmitting large amounts of data and images in real-time, cannot
perform acceptably at the federal benchmark speed of 4 Mbps/1Mbps.
Figure 1: Broadband Technologies and Examples of Applications
Performing at Various Speeds:
[Refer to PDF for image: illustration]
Broadband download and upload speed ranges (in megabits per second)
(slower to faster):
Satellite
Down: 0.768;
Up: 0.384;
to:
Down: 3;
Up: 0.768.
Wireless:
Down: 0.256;
Up: 0.256;
to:
Down: 10;
Up: 1.
Digital Subscriber Line (DSL):
Down: 0.256;
Up: 0.256;
to:
Down: 10;
Up: 1.
Cable:
Down: 0.256;
Up: 0.256;
to:
Down: 50;
Up: 10.
Fiber-optic:
Down: 0.256;
Up: 0.256;
to:
Down: 100;
Up: 10.
Speeds required for good results[A] from selected applications:
Web browsing:
Down: 0.256;
Up: 0.256;
to:
Down: 100;
Up: 10.
E-mail large attachments
Down: 0.768;
Up: 0.384;
to:
Down: 100;
Up: 10.
Download small files:
Down: 1;
Up: 0.384 (8 seconds);
to:
Down: 100;
Up: 10 (1 second).
Download large files:
Down: 1;
Up: 0.384 (16 seconds);
to:
Down: 100;
Up: 10 (1 second).
Videoconferencing streaming at 384 kilobits per second (single user):
Down: 3;
Up: 0.768;
to:
Down: 100;
Up: 10.
Videoconferencing streaming at 768 kilobits per second (multi-users):
Down: 10;
Up: 1;
to:
Down: 100;
Up: 10.
Upload videos, presentations (1 gigabyte):
Down: 25;
Up: 5 (27 minutes);
to:
Down: 100;
Up: 10 (14 minutes).
Download high-definition video in real time (2 gigabytes);
Down: 50;
Up: 10 (6 minutes);
to:
Down: 100;
Up: 10 (3 minutes).
Speeds required for good results[A] from selected off-site activities:
Teleworking[B]:
Down: 50;
Up: 10;
to:
Down: 100;
Up: 10.
Distance Learning[C]:
Down: 50;
Up: 10;
to:
Down: 100;
Up: 10.
Telemedicine[D]:
Down: 50;
Up: 10;
to:
Down: 100;
Up: 10.
Source: GAO analysis of Small Business Administration information.
[A] The figure above depicts applications, and the off-site activities
they allow, that perform well at given speeds. While it is possible
for the applications to perform at speeds lower than those indicated
above, that performance is generally at a fair or unacceptable level,
and is therefore undesirable for business and residential users.
[B] Many people telework (also known as telecommuting), which is the
ability for an organization's employees and contractors to perform
work from locations other than the organization's facilities. Most
teleworkers use remote access, which is the ability for an
organization's users to access its non-public computing resources from
external locations other than the organization's facilities. National
Institute of Standards and Technology, Guide to Enterprise Telework
and Remote Access Security, Special Publication 800-46 Revision 1
(Gaithersburg, MD: 2009), page 2-1.
[C] Distance learning today can take many forms and is defined by
federal law and regulation as education that uses one or more
specified technologies (e.g., the Internet or audio conferencing) to
deliver instruction to students who are separated from the instructor
and to support regular and substantive interaction between the
students and the instructor. 20 U.S.C. § 1003(7) and 34 C.F.R. § 600.2.
[D] Telemedicine technologies can allow rural patients to receive,
through remote access, medical diagnosis or patient care, often from
specialists who are located in urban areas or university hospitals.
Increased use of video consultation, remote patient monitoring, and
electronic health records enabled by telemedicine technologies hold
the promise of improving health care quality, safety, and efficiency.
GAO, Telecommunications: FCC's Performance Management Weaknesses Could
Jeopardize Proposed Reforms of the Rural Health Care Program, GAO-11-
27 (Washington, D.C.: Nov. 17, 2010).
[End of figure]
Unserved and underserved areas tend to have conditions that increase
the cost of constructing and maintaining broadband networks. These
conditions include low populations who might also be widely dispersed
and in remote areas that might have challenging terrain, such as
mountains, that increase construction costs. The choice of broadband
technology and the ability to use or extend existing infrastructure
also affects the costs of constructing and maintaining broadband
networks. Certain technologies like cable and fiber, which must be
buried underground or placed on raised poles, could be more expensive
to deploy in remote areas than wireless technologies, such as cellular
towers.
Within the federal government, FCC, the Department of Commerce, and
the Department of Agriculture (USDA) have roles in broadband
deployment. In particular, Congress gave FCC a large role in fostering
broadband deployment when it directed FCC to "encourage the deployment
on a reasonable and timely basis of advanced telecommunications
capability to all Americans."[Footnote 8] In responding to that
directive, FCC developed goals to broaden broadband deployment to
unserved areas and encourage investment and innovation in broadband
technologies and services. As part of the Recovery Act, the Department
of Commerce's National Telecommunications and Information
Administration (NTIA) received $4.7 billion to create the Broadband
Technology Opportunities Program (BTOP). Through this program, as of
September 2013, NTIA had awarded 233 competitive grants for a total of
$4 billion to a variety of entities for broadband infrastructure,
public computer centers, and innovative projects to stimulate demand
for and adoption of broadband. In addition, the Department of
Commerce's Economic Development Administration also had programs in
2008 through 2012 that supported the construction of public
infrastructure, which could include broadband infrastructure.[Footnote
9] USDA administers programs that support broadband deployment,
including three Rural Utilities Service (RUS) programs: the Rural
Broadband Access Loan and Loan Guarantee Program, the Community
Connect Grant Program, and the Telecommunications Infrastructure Loan
Program. USDA provided over $7 billion in grants and loans for
broadband projects from 2008 through 2012.
As of December 2012, the National Broadband Map[Footnote 10] depicted
approximately 2 percent of the U.S. population as living in unserved
areas--that is, those not having access to wireline or wireless
broadband service of 3 Mbps download and 768 kbps upload.[Footnote 11]
The map shows broadband access by census block--if a single house or
building in a census block has broadband access, the block is
categorized as served.[Footnote 12] Although FCC does not define
underserved areas, NTIA created a definition and used it in reviewing
projects for consideration to receive BTOP grants.[Footnote 13] Since
the National Broadband Map does not show underserved areas, it is
unknown how many of these areas exist or what percentage of the
population they represent.
The National Broadband Plan noted that because Internet service
providers are unlikely to earn enough revenue to cover the costs of
deploying and operating broadband networks in unserved areas, it is
unlikely that private investment alone will bring service to these
areas. To improve Americans' access to broadband, the National
Broadband Plan recommended that FCC create the Connect America Fund to
provide funds in geographic areas where there was no private sector
business case to provide broadband. FCC established the Connect
America Fund in 2011 as part of the Universal Service Fund (USF).
[Footnote 14] In doing so, FCC reformed the USF high-cost program and
adopted new rules to allow USF monies to be used to support voice and
broadband capable networks. FCC established a $4.5-billion annual
program budget for the Connect America Fund for 6 years.[Footnote 15]
Unserved and Underserved Areas Used Alternative Approaches and
Considered Various Factors to Deploy Broadband:
Alternative Ownership and Financing Approaches:
Project sponsors we spoke with pursued various approaches for
financing and deploying broadband in unserved and underserved areas
that differed from more traditional commercial project models, such as
those often built by incumbent providers in more urban areas. In
particular, types of project sponsors included (1) municipalities, (2)
non-traditional private providers, (3) a consortiums of sponsors in a
region, and (4) cooperatives. The following examples describe some of
the alternative ownership and financing approaches we found (for
summaries of all our 21 case study projects, see app. II).
Municipalities:
Municipal networks are eligible to receive federal funding, but not
all municipal networks discussed in this report received federal
funding. Some municipalities support broadband deployment by funding,
building, and operating networks to provide broadband access to their
communities, much as some cities offer utilities such as water and
electricity. The municipal entity providing this service may be, for
example, a department within the city government or a cooperative
formed among several communities. Communities have used federal funds,
issued bonds, and taken out loans to fund the construction of
municipal broadband networks. In some instances, voter referendums
have been required for the city to take out loans or bonds for this
purpose.
* East-Central Vermont Community Fiber-Optic Network (EC Fiber);
publicly owned, privately funded. A group of 23 Vermont municipalities
collaborated to build this "open-access" fiber-optic network to
provide Internet and voice service to homes and businesses.[Footnote
16] EC Fiber contracts with a non-profit Internet service provider to
operate the network. Construction costs were approximately $5 million,
most of which was financed through local private investors. By
December 2013, EC Fiber had 550 subscribers and had raised $4.7
million from 365 investors--90 percent of whom are residents of towns
the network serves or will serve. The founders decided on a local
private-funding model after the 2008 financial crisis made private
financing from the U.S. capital markets difficult to obtain and after
the project did not receive the Recovery Act's broadband deployment
funds. However, project sponsors said one of the challenges of
privately funding a publicly owned network was that the time frame for
completing the network depends on the rate at which investments can be
raised, which can vary according to the economic circumstances of each
area's residents. For example, the construction of the network is
progressing in phases, with new segments being built as investments
are raised by residents, a process that makes rapid expansion
difficult. The service provider operating the network leases 39 miles
of middle-mile and last-mile fiber-optic capacity from a statewide
open access network being built by the Vermont Telecommunications
Authority, a state agency that in 2013 provided EC Fiber a grant of
$167,569 that funded an expansion into unserved portions of two
communities.[Footnote 17]
* Utah Telecommunication Open Infrastructure Agency (UTOPIA); publicly
owned, publicly funded. UTOPIA is a local government agency owned by
16 Utah municipalities, 11 of which raised public funding through
bonds to build a $177-million fiber-optic open-access network over
which private providers offer Internet, voice, and video services.
Five municipalities decided not to raise funds, but remain on the
network's board and can decide to pursue financing for their cities at
a later date. Some of the network's municipalities own infrastructure,
such as utility poles, which sponsors said helps reduce the cost and
increase the speed of deploying broadband. Project sponsors said their
goal is for the network to be financially self-sufficient, but said
that goal has yet to be attained for various reasons. The project used
$16.2 million of BTOP funds to connect 288 community institutions with
middle-mile service over UTOPIA's fiber backbone. In addition, UTOPIA
received partial funding from a $66 million RUS loan for broadband
deployment to rural areas. After disbursing $21 million to UTOPIA, RUS
suspended the loan until UTOPIA could demonstrate improved financial
performance. Project sponsors told us that they have taken steps to
improve the performance and that 3 years ago they began deploying the
network to areas that promise greater return on investment.
Non-Traditional Private Providers:
Private networks are eligible to receive federal funding but not all
private networks discussed in this report received federal funding.
Some private companies fund, build, and operate networks to provide
broadband access to communities. In some instances, companies have
used federal funds, contributed capital, and taken out loans to fund
the construction of broadband networks. Some private companies we
contacted used municipal resources, such as fiber-optic infrastructure
or took construction loans backed by the federal government.
* Lit San Leandro; privately owned, privately and publicly funded. Lit
San Leandro is a private venture that built, owns, and operates an 11-
mile fiber-optic network providing Internet service directly to over
150 businesses and some community institutions in San Leandro,
California. The network cost approximately $5 million to build, and
was financed in two stages. The owner of a local software company, who
committed a total of $3 million to the project, paid for initial
construction; the second construction phase, covering the last 7.5
miles, was paid for with a $2.1 million grant from the Department of
Commerce's Economic Development Administration. The project was
designed to use "dark fiber"--fiber-optic cable that had already been
installed by the city but was not being used--and 10 percent of that
capacity was reserved for the city's current and future municipal
needs. In exchange for financing and constructing the network, the
city waived leasing costs for the first 10 years of Lit San Leandro's
operation, at which time the costs revert to prevailing market rates,
should the venture be profitable.
* Valu-Net; privately owned, privately funded. This fiber-optic
network in Emporia, Kansas, provides Internet, voice, and video
services directly to over 300 businesses and over 400 residences.
While a survey issued by the city's Chamber of Commerce indicated
strong demand by business owners for broadband, project sponsors said
there was substantial opposition against the city using tax revenue to
deploy a broadband network, and there was a general consensus that a
private service provider should develop the infrastructure and provide
the service. The network is being built first to areas where the most
businesses operate, and project sponsors told us they would only
connect a home once a subscriber requests service. They told us the
company financed approximately $5 million of the construction cost so
far through community investors and approximately $5 million through
bank loans, including a low-interest Small Business Administration
loan. They anticipate needing up to $3 million more to complete
construction. In addition, a healthcare firm in the northern part of
the city that desired higher capacity broadband service helped finance
part of the construction costs to deploy fiber-optic cable under a
highway.
Consortiums of Sponsors in a Region:
Regional networks are eligible to receive federal funding and all
regional networks discussed in this report either received federal
funding or are planning to apply for it. These networks focus on
building middle-mile infrastructure and providing broadband services
to schools, medical providers, public safety agencies, and other
community anchor institutions. The availability of broadband service
to end users depends upon access to adequate middle-mile facilities,
which can be costly to deploy in rural areas, especially in
mountainous or heavily forested areas where additional infrastructure
can be required. In some cases, regional networks also provide the
last-mile service to end users.
* MassBroadband 123; publicly owned, publicly funded. Built by a state
economic development agency, this open-access, middle-mile network
provides 122 towns in western and central Massachusetts with a fiber-
optic backbone over which private service providers offer Internet,
voice, and video directly to community institutions across western and
central Massachusetts. The project is owned by a state technology
agency and includes a public-private partnership with a company to
sell network capacity to Internet service providers on a wholesale,
open-access basis. Officials said they assigned the risk for operating
and maintaining the network to the company, and structured a revenue-
sharing agreement with it so that it would be motivated to operate the
network efficiently. The project cost approximately $90 million to
build and was financed through a $45.5 million BTOP grant in
combination with $44.5 million in state funds.
New Hampshire FastRoads; publicly owned, privately and publicly
funded. This open-access middle-mile and last-mile network provides
last-mile connectivity to 233 community institutions in 19
communities, and 1,300 residences and businesses in two towns. Four
private Internet service providers use the network to serve customers
directly. The venture is a wholly-owned limited liability corporation
of a local economic development non-profit, and officials structured
the network as a for-profit to allow them to raise additional private
equity to expand service in the future. Two local economic development
organizations and 42 towns collaborated on the project, which cost
$7.6 million to build, and was financed using $5.4 million of BTOP
funds, as well as additional funding from a variety of sources
including banks, a county economic development corporation, individual
donors, and vendors who offered in-kind contributions.
Cooperatives:
Networks that are owned by cooperatives may qualify to receive federal
funding. According to project sponsors for the cooperative networks we
contacted, three rural electric cooperative networks received no
federal funding and the fourth plans to seek support payments from
FCC's Connect America Fund. Rural electric cooperative networks serve
areas that have lower customer-per-mile density levels than those of
privately owned or municipal utilities, levels that can make return on
investment projections for broadband deployment less attractive to
investors. Some cooperative networks link their broadband deployment
efforts with "smart grid" efforts that allow two-way communications
between the cooperative and the customer.[Footnote 18]
* Douglas Fast Net; privately owned, privately funded. This subsidiary
of the Douglas Electric Cooperative in southwest Oregon owns and
operates a hybrid fiber-optic, DSL, and wireless network in
collaboration with five other rural electric cooperatives and one
Native American tribe, and provides connectivity, Internet, and voice
services to businesses, residences, schools, and medical and community
institutions in Douglas County.[Footnote 19] In extremely rural areas,
rather than using wireless technology to reach residences, the fiber-
optic network uses leased copper telephone lines--DSL. Like most rural
electric cooperatives, Douglas Electric is a non-profit corporation
incorporated under state statutes; however, its broadband subsidiary
was established as a for-profit entity, so it can declare dividends
and channel excess funds back to the electric cooperative. Officials
financed $6.5 million in construction costs using a $300,000 grant
from a county economic development entity, a loan of $4.2 million from
the electric cooperative, and $2 million from customer installation
charges. Project sponsors said existing infrastructure and personnel
improved the project's business case, and they cited experienced line
crews and ownership of most of their own plant--with the exception of
a limited number of leases from third parties--as beneficial project
components. While they have not sought federal funds for commercial
deployment yet, officials said USF E-Rate funding allowed them to
deploy broadband to schools and libraries, which lowered the
deployment costs when they subsequently expanded the network to
businesses and homes.[Footnote 20]
* Midwest Energy Cooperative, Pilot Project; privately owned,
privately funded. Midwest Energy is building a 243-mile fiber-optic
network to create a high-speed communication link to allow smart grid
applications. As part of that effort, project sponsors said the
cooperative has begun building a $9.5-million pilot project connecting
963 homes and businesses with fiber-optic cable in order to assess the
feasibility of a potentially larger future network deployment.
Officials said they hope to reach 24,000 homes and 2,500 businesses by
potentially financing approximately half the construction costs for
the larger project with monies from FCC's Connect America Fund, should
they be eligible for those funds in the future. Project sponsors cited
the cooperative's experience maintaining utility rights-of-way and
electrical power infrastructure as factors that would allow them to
deploy a broadband network quickly and cost-effectively.
Factors Considered:
In making broadband deployment decisions, project sponsors told us
they considered various factors related to their ability to fund
successful projects, including the (1) likelihood of near-term service
upgrades by incumbent broadband service providers; (2) potential
demand for new service; (3) potential broadband technologies; and (4)
existing infrastructure and potential local assistance for providers.
Likelihood of Service Upgrades by Incumbent Providers:
Project sponsors told us that in evaluating the market, they
considered existing broadband service, including speed available from
current providers in their area, and whether further deployment or
upgraded service from these providers was likely. The following
examples describe some of the projects for which sponsors told us they
considered existing service, including by asking incumbent providers
about their plans to expand or improve service:
* Camino Fiber Network Cooperative, Northern California (Planned, but
currently inactive). This municipal network was planned as a consumer
telecommunications cooperative corporation, and was designed to
provide open-access fiber-optic broadband service to about 50,000
mostly rural residences in El Dorado County, California. Officials
told us that while planning the network, they asked the incumbent
provider companies whether they had plans to extend broadband service
to currently unserved areas in the county and were told the population
density was too low in many areas to justify the cost of extending
service. As a result, officials said they decided to attempt to build
their own fiber-optic service over an open-access network. However,
officials told us they could not secure enough public or private
funding to hire engineering consultants to design the network and plan
the business, and as a result the project is inactive.
* Greenlight, Wilson, North Carolina. Project sponsors for this
municipal network said they approached both local cable and telephone
incumbent carriers to ask if they had plans to improve their cable and
DSL broadband networks for underserved areas or to extend their
networks to unserved areas, and were told the companies had no plans
to do so. Officials said they then asked if the companies would
consider entering into a public-private partnership with Wilson; the
companies declined to do so. As a result, officials said they decided
to build, own, and operate their own fiber-optic network, and to use
existing city-owned infrastructure, such as telephone poles and
utility rights-of-way, to do so. Officials said they decided to offer
retail Internet, voice, and video services directly to customers to
secure enough subscribers to support the network. To finance the $35
million cost of construction, the city issued certificates of
participation--a form of extended lease agreement secured by city
property, payments on which are subject to annual appropriation by the
city, and which are not considered a long-term obligation or debt.
Potential Demand for New Service:
Project sponsors told us they considered potential demand for new
service in their area. The following examples describe some of the
ways sponsors told us they estimated potential demand for new service
to ascertain the business case for deployment:
* Gold Country Broadband Consortium, Northern California (Planned).
Project sponsors for this open-access regional network are
investigating potential technologies and partners to bring broadband
service to residential and commercial customers across five counties
in the foothills of the Sierra Mountains. Officials told us a non-
profit economic development agency leads the consortium. To determine
the demand for broadband service, the agency held community meetings
and conducted telephone and Internet surveys about current and desired
levels of service and willingness to pay a competitive rate to
subscribe. Currently the agency is presenting this demand data to
independent Internet service providers at community meetings to
determine when and if they are planning to offer service, and to
investigate technologies they could use to deploy broadband. The
agency helped potential Internet service providers apply for state and
federal grants, and plans to use the knowledge gained to pursue other
opportunities in the future.
* Vermont Telecommunications Authority, Montpelier, Vermont. This
state-chartered entity provides infrastructure grants to finance
regional open-access fiber-optic and wireless broadband networks, and
develops infrastructure such as dark fiber, on which it leases
capacity to multiple private service providers that serve customers.
Authority officials told us they helped lower the cost of deployment
in rural areas where population density is low by building and funding
telecommunications infrastructure that is open to multiple uses and by
gauging the combined demand of businesses, municipal governments,
healthcare facilities, and community institutions such as libraries
and state colleges that want broadband service and working to meet
their broadband requirements. They said aggregating demand in this
way, when combined with lowering the capital costs of the
infrastructure, improves the business case for investing in broadband
networks, and may encourage providers to consider investing in network
construction.
Potential Broadband Technologies:
Project sponsors told us they considered various broadband technology
options available to meet potential demand for service. The following
examples describe some of the technologies sponsors told us they are
using, have considered using, or have been unable to use:
* Rappahannock Electric Cooperative, Fredericksburg, Virginia.
Officials from the rural electric cooperative said they have
investigated various technologies and are considering using any one of
them, or a combination of different technologies, to make broadband
service available to cooperative members. They acknowledged that it
might not be possible to deploy fiber-optic cable because of the high
cost. Previously, the cooperative invested in a wireless company to
provide broadband service, but the company went bankrupt before it
could complete the network. Rappahannock officials said they are now
considering marketing the services of a satellite broadband provider
to customers, rather than constructing a network, primarily due to the
expense of building a network.
* Co-Mo Comm, a Subsidiary of Co-Mo Electric Cooperative, Tipton,
Missouri. Officials told us they considered deploying a wireless
broadband network, but decided that the terrain in their area would
obstruct wireless signals. They also considered satellite broadband,
but cited concerns about speed and latency--that is, the time it takes
for a set, or packet, of data to travel from one designated point to
another in a network.[Footnote 21] They were also concerned about caps
on data use that would make satellite service too expensive for larger-
capacity users such as businesses. Officials said they decided to
deploy a $1.3 million fiber-optic pilot network, and possibly a larger
$60 million expansion project mainly because their members will need
increasing amounts of bandwidth capacity in the future as new
applications emerge.
Existing Infrastructure and Potential Local Assistance to Providers:
Project sponsors told us they considered their existing available
assets as well as the extent to which assets or assistance from local
governments is available to reduce costs for broadband providers. The
following are examples of project sponsors who told us using existing
assets can improve the business case for deploying broadband:
* Google Fiber, Kansas City, Missouri. This private network received
assistance from Kansas City to deploy broadband. Kansas City officials
counted among the city's available assets ownership of the rights-of-
way and city properties, including public parks. The city helped
facilitate an agreement for use of certain utility easements--the
areas surrounding power lines--for approximately 90,000 utility poles
owned by Kansas City Power and Light, a local utility owned by private
investors. The city negotiated with Google Fiber the use of these
rights-of-way and of city properties free of charge in exchange for
the company's construction of a $250--$300 million fiber-optic network
to serve homes with Internet and video service, as well as an
agreement to provide free Internet connectivity to 300 public
buildings, schools, community centers, and libraries. As the authority
in charge of local regulation, the city streamlined the regulatory
process governing permitting, fee waivers, and other requirements to
allow for the accelerated construction of the Google Fiber network,
and of any other potential future broadband networks. As part of that
effort, the city utilized its online permitting system and expedited
its reviews of pole attachment applications.
* Municipal Power Utility, Princeton, Illinois. The municipality
initially installed fiber-optic cable to enhance its internal
communications capacity. Princeton officials said the town's mayor
then led a subsequent effort to deploy broadband on a larger scale as
part of an economic development initiative to attract industrial
companies. They said the combined cost for equipment, design, and
construction for both networks was approximately $1.2 million, and
they told us they considered their utility crews' previous experience
installing the fiber-optic cable as an asset that helped attract an
independent service provider to provide broadband service to customers
over the network.
Stakeholders Cited Economic, Legal, and Policy Issues in Deploying
Broadband in Unserved and Underserved Areas:
Economic:
Stakeholders we contacted, including project sponsors, broadband
providers, and industry experts, told us that broadband deployment
projects in unserved and underserved areas face challenging economic
issues. As noted above, remote areas generally have high costs to
deploy broadband due to the expense of deploying technologies over
long distances and potentially difficult terrain to often relatively
few potential subscribers. For these reasons, stakeholders told us
that being able to cover costs with potential revenues and thus make a
return on investment is a key issue to deploying broadband in unserved
and underserved areas. Stakeholders told us that deployment costs can
be reduced if there is easier access to rights-of-way, public
facilities, and conduits already underground. For example, the
opportunity to install cellular antennas on public water towers or
thread fiber into existing conduit can reduce construction costs while
leveraging public infrastructure. Stakeholders also told us that the
costs of financing projects affect the projects' overall costs.
Project sponsors that could use public-financing, such as municipal
bonds, had lower capital costs than private companies and thus could
more cheaply finance their projects. Project sponsors that could use
revenues from existing services, such as electricity subscribers, had
funds available to deploy broadband which allowed them to leverage
financing.
Project sponsors noted that the projects receiving federal funds were
able to reduce their own costs of the project and obtain better
financing terms due to the federal subsidy. However, project sponsors
we contacted told us they are challenged by a lack of clear
information about which federal funds are available for broadband
deployment, which entities can make use of the funds, and how to apply
for them. One sponsor from a small town said his staff lacked the
expertise necessary to meet reporting requirements tied to using
federal funds and his department did not have the financial resources
available to hire consultants to assist. Another sponsor in a rural
area said paying for telecommunications-engineering consultants to
estimate construction and operating costs was the main challenge the
project faced, because without such estimates, the project could not
apply for federal funds. We found some trade associations provided
educational materials about federal broadband programs, but such
associations typically only provided information or resources to their
members. We also found the mission of some trade and industry groups
steered them to advocate for a particular technology, rather than
offering neutral advice on technological alternatives.
Legal:
Project sponsors and industry experts we contacted told us that some
states have laws that limit or ban companies that are not
telecommunications companies from deploying broadband, on the basis
that it creates unfair competition. As a result, project sponsors told
us they considered their state's legal environment when considering
alternate broadband service options. For example, in Vidalia,
Louisiana, an official told us that state laws bar any municipality
from deploying broadband directly to consumers, so the city is
planning to build and own a new fiber-optic network, but will not
offer retail service in order to comply with the law and avoid
competing with incumbent cable and telephone companies. Instead, a
Vidalia official said they will seek to improve broadband service
options by offering independent service providers the opportunity to
provide Internet, telephone, and video services over the network to
the town's approximately 4,000 residents. According to one legal
expert who works with states that we contacted, as of May 2013, 20
states had in place restrictions on community broadband services or
other public communications initiatives.[Footnote 22] Some of the
project sponsors we interviewed said that they had been affected by
such laws. For instance, some, but not all, existing public providers
in North Carolina are partially exempt from such requirements and can
offer broadband service. We spoke to officials from one such provider,
the city of Wilson, who said that they built their fiber-optic network
before the state law that limits municipalities providing broadband
service and were granted an exemption to operate the network which
serves 6,000 accounts. However, the officials said they are not
permitted to expand the network or otherwise provide
telecommunications services outside the county due to the state's
requirements, which limit their ability to bring broadband service to
unserved and underserved areas in the region. While California public
entities are generally allowed to provide communications services,
Community Service Districts have the authority to provide
communications services only as long as no private person or entity is
willing to do so.[Footnote 23] However, if such a private-sector
operator emerges, the Community Service District must sell or lease
its communications system to that person at "fair market value," which
could be below cost. An official from Lit San Leandro, a private
California alternative provider, said two companies were formed as
protection against incumbent provider lawsuits, which he said have
been directed at some California municipalities for allegedly gaining
unfair advantage by using city-owned conduit to compete against a
private entity. A cable broadband provider told us that cable
companies generally will not invest in broadband deployment in
municipal areas that are already receiving public deployment funds
because the public funds amount to subsidized broadband service,
against which it is difficult for private companies to compete.
According to the National Broadband Plan, Congress should make clear
that state, regional, and local governments have the right to build
broadband networks in the absence of private investment.[Footnote 24]
Policy:
Stakeholders we contacted, including project sponsors and industry
participants, noted that there are several policy issues that affect
broadband deployments in unserved and underserved areas. First,
stakeholders expressed concern that an area's inaccurate designation
on the National Broadband Map can have financial consequences when the
map deems an area as served even if not all premises in the area have
access to broadband service. For example, an official from an industry
group told us accurate mapping is important because without it, areas
that are served only by dial-up service can be ruled ineligible for
federal broadband deployment funds. In one case, the official said the
National Broadband Map shows the top half of an Indiana county as
covered by broadband service and the bottom half as not covered, but
in reality the entire county only has access to dial-up service (which
is not considered broadband). Stakeholders stated that it could be
difficult to obtain funding for broadband projects if the entire area
is deemed served, so the accuracy of the National Broadband Map is
very important. The data on the National Broadband Map is displayed at
the census block level and if one house or building has broadband
access, the entire census block is deemed served. Stakeholders told us
that this is an issue particularly for remote areas that are part of
large census blocks and have premises located long distances from one
another and from existing broadband networks.[Footnote 25]
Second, project sponsors told us that while they are required to meet
the federal benchmark of 4 Mbps download/1 Mbps upload when applying
for some types of federal funding, this benchmark generally does not
allow for the use of advanced Internet applications such as video
conferencing for online education and telemedicine, which project
sponsors said their communities would like to have. Stakeholders told
us that often universities and hospitals are located far from rural
communities and therefore the ability to use online education and
telemedicine could reduce the need to drive long distances to get a
higher education or see a medical specialist. However, stakeholders
stated it was difficult to garner political support and funding for
broadband technology projects that provide the higher speeds needed
for these advanced applications when the areas have been designated as
served by the National Broadband Map. Moreover, stakeholders told us
that federal universal service funds were provided to projects that
met the federal benchmark although communities wanted projects that
provided higher speeds. Stakeholders told us that federal funds could
be more effectively used by granting funds to projects that provided
the highest broadband speeds rather than to projects providing the
federal benchmark. On the other hand, officials from a cable
association told us municipal projects in particular result in a
mismatch between demand for service and the costs of providing that
service, because they tend to deploy the most advanced technology--
fiber-optic--to the most remote areas with the least demand.
Third, stakeholders representing cable and telecommunications
companies stated that they have policy concerns related to public
funds--both federal and local--being used in areas in which there was
an existing broadband provider. A trade association representing cable
companies noted that federal funds such as Recovery Act grants have
been used in areas already served by private broadband providers, such
as cable companies, which built their networks with no public funds.
The stakeholders representing cable and telecommunications companies
stated that municipalities have used local public funds such as tax
revenues to back municipal bonds in areas already served by private
broadband providers. A trade association representing cable companies
and an industry group representing small-community telephone companies
told us that they believe that using public financing to "overbuild"
in already served areas is unfair competition in that the private
broadband provider has built its network with private capital and does
not have the same financial advantages as the municipality. For
example, an official from an industry group representing small
community telephone companies told us that rather than overbuilding,
municipalities should work with telephone companies to upgrade
existing broadband infrastructure. The official said municipalities
should not be in the business of providing broadband services
themselves and, as evidence, cited bankruptcies and judicial opinions
involving municipal networks in cities such as Provo, Utah, and
Philadelphia, Pennsylvania. In addition, we heard from incumbent
service providers that project sponsors that are public entities, such
as municipalities, can use their existing infrastructure, property,
and facilities to install broadband technologies which can reduce
their deployment costs--an advantage that private companies do not
have. These incumbent service providers noted that broadband networks
proposed by alternate project sponsors generally have not targeted
unserved areas without including already served areas, as it is more
financially attractive to deploy networks in more densely populated
areas that are often already served.
FCC Has Undertaken Various Efforts to Foster Broadband Deployment in
Unserved Areas:
As one of its primary goals, FCC has several efforts under way to
increase broadband deployment, efforts that help to address the
economic and policy issues raised by stakeholders. In particular, FCC
established the Connect America Fund in the November 2011 USF
Transformation Order[Footnote 26] to provide funds for voice and
broadband capable networks in areas where there is no private business
case to provide broadband--one of the key challenges to deploying
broadband.[Footnote 27] As of March 2014, FCC had authorized the
Universal Service Administrative Company (USAC)[Footnote 28] to
distribute almost $438 million from the Connect America Fund for
projects that, according to FCC, would reach an estimated 637,000
households and businesses by 2016.[Footnote 29] As a condition of
receiving funds, FCC requires an eligible telecommunications carrier
(ETC) to offer voice and broadband services in its supported service
area, meet certain broadband performance requirements, and report
regularly on associated broadband performance measures.[Footnote 30]
Many project sponsors we contacted said they would like the
opportunity to receive support from the Connect America Fund to deploy
broadband in unserved and underserved areas, but since they do not
have the ETC designation, they are not eligible to receive funding.
FCC told us that any entity, including cooperatives and municipalities
that meet the requirements for becoming an ETC under Section 214 of
the Communications Act, can petition for ETC designation.[Footnote 31]
However, project sponsors told us they believe they are ineligible to
become an ETC because they do not provide the type of phone service
that would make them eligible. Although project sponsors we contacted
said they provide, or could provide, Voice over Internet Protocol
(phone service that is provided over the Internet), they told us they
believe such service does not satisfy the ETC phone service
requirement. FCC officials told us that FCC has guidance on becoming
an ETC and that Voice over Internet Protocol can be acceptable to
satisfy ETC requirements.[Footnote 32]
In addition, FCC has taken other actions related to broadband
deployment in unserved areas and to address some of the policy issues
noted above. For example, FCC acknowledged that some have claimed that
the National Broadband Map is not completely accurate and adopted a
process by which parties can challenge whether a location was in fact
served by an existing provider.[Footnote 33] Furthermore, as part of
FCC's January 30, 2014 Technology Transition Order, FCC adopted an
experiment in which it intends to solicit proposals from non-
traditional providers, including utilities and municipalities, to
deploy wireline or wireless technologies in rural, high-cost areas.
[Footnote 34] Providers will be eligible to receive Connect America
Funds for projects in high-cost areas and must meet requirements
similar to those of ETCs including providing service to all those in a
designated service area, reduced rates for voice service plans for low-
income populations, and the ability to operate during emergency
situations. Providers are not required to be ETCs to apply but, if
selected for the program, must be designated an ETC before receiving
funding. FCC has stated that it will use the experiment to gain
experience and generate data that could help inform its future policy
decisions, including those related to streamlining the ETC designation
process and whether and how to make support from the Connect America
Fund more widely available. In addition, FCC has stated that it will
collect information on viable business models that could support the
deployment of fiber-optic or other next-generation wired technology in
rural areas, despite the challenges in doing so. FCC plans to also
gather information on the conditions under which consumers would
prefer next-generation wireless services instead of wireline services.
Most recently, in April 2014, FCC told us that the FCC Chairman
indicated that he had circulated to his fellow Commissioners a draft
notice of proposed rulemaking to review the broadband speed benchmark,
as well as other issues relating to implementation of the Connect
America Fund.[Footnote 35]
FCC also provides assistance to help unserved areas deploy broadband
by participating in a federal working group that looks at streamlining
policies and permitting on federal properties.[Footnote 36] Many rural
areas have federal highways and lands and stakeholders told us that
attaining rights-of-way is costly, so streamlining federal policies
and permitting could expedite broadband deployments and lower costs.
The Broadband Deployment on Federal Property Working Group consists of
seven federal agencies that plan to develop recommendations to create
a more coordinated and consistent approach in implementing agency
procedures, requirements, and policies related to access to federal
assisted highways, lands, buildings, and rights-of-way and the leasing
of federal assets for broadband deployment.[Footnote 37] FCC also
provides policy assistance by looking at ways in which broadband
capacity and infrastructure could be shared, a step that could lower
deployment costs and leverage private participation in broadband
projects. For example, in response to a request from FCC's chairman,
FCC's Intergovernmental Advisory Committee identified potential ways
to use excess fiber capacity to accelerate broadband deployment
through public-private partnerships in January 2013.[Footnote 38] Such
opportunities include the lease, sale, or trade of broadband capacity
with public and private partners, where such an arrangement advances
public purposes.
Agency Comments:
We provided a draft of this report to FCC for its review and comment.
FCC provided technical comments, which we incorporated into the report
as appropriate.
We are sending copies of this report to the Chairman of FCC and
appropriate congressional committees. In addition, the report will be
available at no charge on the GAO website at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Contact information and major
contributors to this report are listed in appendix III.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This report provides information on (1) what is known about the
alternative approaches unserved and underserved areas have used, or
attempted to use, and some factors considered in broadband deployment
decisions; (2) stakeholders' views on broadband deployment issues in
unserved and underserved areas; and (3) efforts FCC has undertaken to
foster broadband deployment in unserved areas.
To gather information on the alternatives unserved and underserved
areas used, or attempted to use, to deploy broadband, and on
stakeholders' views on deployment, we conducted a review of relevant
published literature that included government reports, industry
articles, and publications from associations, non-profits, and public
policy research organizations. We also interviewed telecommunications
stakeholders involved in broadband deployment to unserved and
underserved areas to obtain their views on the deployment alternatives
that unserved and underserved areas used, or attempted to use, their
views on broadband deployment issues, and the extent of FCC's role in
broadband deployment in these areas. We reviewed and analyzed reports
provided by these stakeholders as appropriate. Those we interviewed
included associations representing consumers and industry, broadband
consultants and providers, and officials from local agencies in
selected areas where broadband projects were deployed or attempted. To
identify stakeholders, we referred to prior published literature, and
we considered the recommendations stakeholders made during our
interviews. Table 1 contains a detailed list of the stakeholders
included in our study.
Table 1: List of Telecommunications Industry Stakeholders Interviewed:
Stakeholder category: Broadband consultants;
Name:
Jim Baller, Telecommunications Lawyer;
Design Nine Consultants;
Lookout Point Communications.
Stakeholder category: Case study projects: co-operative broadband
networks;
Name:
Camino Fiber Network Co-operative, El Dorado County, CA (a consumer
telecommunications cooperative corporation);
Co-Mo Electric Co-operative, Tipton, MO;
Douglas Electric Co-operative, Douglas County, OR;
Midwest Energy Co-operative, Cassopolis, MI;
Rappahannock Electric Co-operative, Fredericksburg, VA.
Stakeholder category: Case study projects: municipal broadband
networks;
Name:
East Central Vermont Community Fiber Network, Royalton, VT;
Greenlight, Wilson, NC;
Powellink, Powell, WY;
Princeton, IL;
Utah Telecommunication Open Infrastructure Agency, UT;
Vidalia Broadband Initiative, Vidalia, LA.
Stakeholder category: Case study projects: private company broadband
networks;
Name:
Google Fiber, Kansas City, MO;
Lit San Leandro, San Leandro, CA;
Valu-Net, Emporia, KS;
Vermont Telephone Company, Springfield, VT.
Stakeholder category: Case study projects: regional consortiums
broadband networks;
Name:
Gold Country Broadband Consortium, Auburn, CA;
Microelectronics Center of North Carolina (MCNC), Research Triangle
Park, NC;
MassBroadband 123, Westborough, MA;
New Hampshire FastRoads, Keene, NH;
Golden Bear Broadband--Northern California Regional Middle Mile
Infrastructure, Northern CA;
Vermont Telecommunications Authority, Montpelier, VT.
Stakeholder category: Consumer advocacy group;
Name:
Institute for Local Self-Reliance.
Stakeholder category: Incumbent broadband providers;
Name:
Midcontinent Communications;
Windstream Telecommunications.
Stakeholder category: Municipal officials;
Name:
Kansas City, MO.
Stakeholder category: National non-profit;
Name:
Connected Nation.
Stakeholder category: Trade and industry groups;
Name:
American Public Power Association;
Fiber to the Home Council;
National Association of Regulatory Utility Commissioners;
National Cable and Telecommunications Association;
National Rural Electric Co-operative Association;
National Rural Telecommunications Co-operative;
National Telecommunications Co-operative Association;
Rural Broadband Initiative;
United States Telecom Association;
Utilities Telecom Council.
Source: GAO.
[End of table]
To gather in-depth information on the deployment alternatives that
unserved and underserved areas used, or attempted to use,
stakeholders' views on deployment, and the extent of FCC's role in
deployment to these areas, we interviewed officials from 21 broadband
network project cases studies and analyzed documents they provided to
us. To select the 21 case studies, we analyzed the results of our
literature search and stakeholder interviews to assemble a list of
potential broadband network projects in unserved and underserved areas
and assigned each to one of four categories of networks established
by: municipalities, private companies, regional consortiums, and
cooperatives. The potential projects included some networks that were
planned but did not come to fruition for various reasons. From these,
we selected 21 case studies that represented all four project types
and that included public, private, or a mixture of both types of
funding. We sought geographic variety by assigning the cases to six
U.S. regions: Midwest, Northeast, Northwest, South, West, and Mid-
Atlantic, and as we selected cases, we included ones from each region.
While there may be valuable lessons in the examples profiled in our
case studies, their limited number does not allow us to generalize
findings to the broader universe of all entities seeking to deploy
broadband networks. The information we present on the deployment
alternatives that have been used in our 21 case studies represents
information provided by project sponsors. It was beyond the scope of
our work to assess the reliability of this information. It was also
beyond the scope of our work to determine whether all, or any, of the
examples deployed, or not deployed, are the most effective models for
broadband network deployment to unserved and underserved areas.
To assess what existing broadband speeds and technologies were
available in the case study areas and to compare them to those offered
by our case study projects, we took a sample of 6 of our 21 case
studies and collected data from those areas from the National
Broadband Map, which measures national access to broadband as of
December 2012, and depicts available broadband technologies and
maximum advertised speeds that are available in the United States.
[Footnote 39] Our sample included projects from three municipalities
and one each from the private company, regional consortiums, and
cooperative categories. Because the National Broadband Map was
designed to provide data for one address or one town, and 14 of our 21
networks operated regionally, covering multiple towns, we did not try
to determine broadband speeds for all 21 of our case study locations.
Instead, we took a sample of the case study networks. To choose the
sample, we considered the 7 networks (4 municipals out of 6, and 3
private companies out of 4) that operated in discrete locations, and
chose 4 of those: 3 municipals and one private company. We chose a
higher number of municipal networks because there were 6 in our case
study sample, versus 4 private companies. Because we wanted to include
examples of all 4 network types, we also chose one regional consortium
network and one cooperative network. Even though all the networks from
these two categories were regional in nature, and served large areas
with multiple towns, we searched for and found one from each category
that served a smaller population for a discrete area that was
appropriate to enter into the National Broadband Map. For that reason,
we included New Hampshire FastRoads, a regional network that directly
serves customers with broadband in two New Hampshire towns, and Co-Mo
Comm, a cooperative that serves customers in two Missouri towns as
part of a broadband pilot project.
To gather information on stakeholders' views on economic, legal, and
other issues they believe affected their ability to deploy a network,
we interviewed project sponsors where projects were deployed or
attempted and associations representing consumers and industry. The
economic, legal, and other issues identified by project sponsors
should not be viewed as identifying all issues that could affect
broadband deployment in unserved and underserved areas; however, the
issues presented were consistently raised by the project sponsors.
Also, the economic, legal, and other issues that we report on should
not be viewed as being representative of all entities deploying
broadband in unserved or underserved areas.
To gather information on actions, if any, FCC has taken to foster
broadband deployment in unserved areas, we interviewed FCC officials
and analyzed documents they provided us. We also interviewed industry
experts, incumbent providers, project sponsors, and stakeholders. In
addition, we analyzed the 2010 National Broadband Plan and its
recommendation that FCC create the Connect America Fund to provide
universal service funds in geographic areas where there is no private
sector business case to provide broadband. We analyzed the 2011 USF
Transformation Order[Footnote 40] and the January 2014 Technology
Transition Order,[Footnote 41] and we interviewed FCC officials about
how, if at all, FCC has made enhancements to Connect America Fund
eligibility.
We conducted this performance audit from May 2013 to April 2014 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Selected Information on Broadband Projects in 21 Case
Study Areas:
We gathered data on broadband projects in our 21 case study areas from
interviews we conducted with project sponsors and, in some cases, from
documents they gave us. As described in appendix I, we assigned each
project to one of four categories. We collected information on scope,
status, construction costs, and funding from officials we interviewed.
Table 2 summarizes the information we collected from the project
sponsors.
Table 2: Attributes of Broadband Projects in 21 Case Study Areas:
Project category: Cooperative;
Project name and operating status: Camino Fiber Network Cooperative;
Planned (Inactive);
Project description and infrastructure scope:
Network was to provide fiber-optic broadband service over an open-
access network for approximately 50,000 residences in El Dorado
County, California;
New middle-mile infrastructure for multiple private Internet service
providers to offer last-mile service;
Project construction costs and federal funding:
Construction cost estimates unavailable from sponsor; No federal
funding.
Project category: Cooperative;
Project name and operating status: Co Mo Comm, Co-Mo Electric
Cooperative;
Pilot broadband network: Operational;
Potential expansion of pilot into larger broadband network: Planned;
Project description and infrastructure scope: Fiber-optic network for
residences and some businesses with Internet, telephone, and video
services in central Missouri;
New middle and last-mile infrastructure;
Project construction costs and federal funding:
$1.3 million pilot project;
$60 million (estimated) network expansion;
No federal funding.
Project category: Cooperative;
Project name and operating status:
Douglas Fast Net, Douglas Electric Cooperative; Operational;
Project description and infrastructure scope:
Hybrid fiber-optic, DSL, and wireless network for residences and
businesses with Internet and telephone service in Douglas County,
Oregon; New middle and last-mile
infrastructure;
Project construction costs and federal funding:
$6.5 million;
No federal funding.
Project category: Cooperative;
Project name and operating status:
Midwest Energy Cooperative;
Internal communications network:
Operational;
Pilot broadband network: Operational;
Potential expansion of pilot into larger broadband network: Planned;
Project description and infrastructure scope:
2 existing and 1 potential fiber-optic network projects involving new
middle and last-mile infrastructure;
Communications network delivers smart grid[A] applications for electric
utility customers;
Pilot and potential broadband networks are for serving residences,
businesses, and community institutions in southwest Michigan with
Internet and telephone service (with video service likely in the
future);
Project construction costs and federal funding:
$9.5 million utility communications network, including $1.4 million
USDA RUS loan;
$2.9 million for pilot network;
$52.8 million (estimated) for planned broadband network;
Sponsors plan to seek FCC Connect America Fund funding for 50 percent
of the construction cost of planned network.
Project category: Cooperative;
Project name and operating status:
Rappahannock Electric Cooperative;
Marketing relationship with third-party satellite broadband provider:
Planned;
Project description and infrastructure scope:
Rappahannock Electric Cooperative is considering a partnership with
the National Rural Telecommunications Cooperative (NRTC) to offer its
mostly residential customers in 22 Virginia counties third-party
satellite broadband Internet service which it will market to its
members, with NRTC responsible for installation, customer service, and
billing;
No new Rappahannock Electric Cooperative infrastructure;
Project construction costs and federal funding:
No cost to Rappahannock Electric Cooperative, all costs borne by NRTC;
No federal funding.
Project category: Municipal network;
Project name and operating status:
East Central Vermont Community Fiber-optic Network; Operational;
Project description and infrastructure scope:
Fiber-optic Internet and telephone service for residences and
businesses in 23 Vermont municipalities;
New infrastructure for last-mile service;
Project construction costs and federal funding:
$5 million (estimated);
No federal funding.
Project category: Municipal network;
Project name and operating status: Greenlight; Operational;
Project description and infrastructure scope:
Fiber-optic Internet, telephone, and video service for businesses,
residences, schools, and municipal utilities in Wilson, North Carolina;
New infrastructure using existing city-owned utility lines for last-
mile service;
Project construction costs and federal funding:
$35 million;
No federal funding.
Project category: Municipal network;
Project name and operating status: Powellink; Operational;
Project description and infrastructure scope:
Fiber-optic Internet, telephone, and video service for businesses,
residences, schools, a hospital, a junior college, and municipal
government entities in the 6,000 person town of Powell, Wyoming;
New infrastructure using existing city-owned utility lines initially
for one exclusive private Internet service provider to offer last-mile
service, with other providers able to offer service in the future;
Project construction costs and federal funding:
$5 million;
No federal funding.
Project category: Municipal network;
Project name and operating status:
Princeton; Fiber-optic and broadband over powerline[B] networks:
Operational;
Project description and infrastructure scope:
Fiber-optic Internet service to 9 residential customers, 75
businesses, schools, a hospital, a library, and municipal entities in
the 7,800 person town of Princeton, Illinois;
Limited-capacity broadband over powerline Internet service to
residents desiring basic service;
Both networks: new infrastructure using existing city-owned utility
lines for last-mile service;
Project construction costs and federal funding:
$1.3 million for both networks;
No federal funding.
Project category: Municipal network;
Project name and operating status:
Utah Telecommunication Open Infrastructure Agency; Operational;
Project description and infrastructure scope:
Fiber-optic broadband service over an open-access network connecting
municipal government entities and community institutions, and leasing
access to private service providers that provide Internet, telephone,
and video services to customers in 10 Utah municipalities;
New middle-mile infrastructure using existing city-owned utility lines
in some locations for multiple private Internet service providers to
offer last-mile service;
Project construction costs and federal funding:
$177 million, including $16.2 million NTIA BTOP grant, $21 million of
an up to $66 million USDA RUS loan (withdrawn by RUS after $21 million
was loaned).
Project category: Municipal network;
Project name and operating status:
Vidalia Broadband Initiative; Planned;
Project description and infrastructure scope:
Fiber-optic network for advanced utility applications will be expanded
into hybrid fiber-optic and wireless network for Internet, telephone,
and video services to customers in the 4,000 person town of Vidalia,
Louisiana;
New middle-mile infrastructure using existing city-owned utility lines
for private Internet service providers to offer last-mile service;
Project construction costs and federal funding:
$11.7 million;
No federal funding.
Project category: Private company;
Project name and operating status: Google Fiber; Operational;
Project description and infrastructure scope:
Fiber-optic broadband service providing Internet and video service to
residences in Kansas City, Missouri;
New infrastructure using existing utility-owned lines for last-mile
service;
Project construction costs and federal funding:
$250-300 million (estimated);
No federal funding.
Project category: Private company;
Project name and operating status: Lit San Leandro; Original network:
Operational; Network expansion operational by the end of 2014: Planned;
Project description and infrastructure scope:
Fiber-optic network Internet service over 150 businesses and some
community institutions including schools, hospitals, and a library, in
San Leandro, California; Original and expansion: new and existing
infrastructure using city-owned conduit to install fiber-optic lines
for last-mile service;
Project construction costs and federal funding:
$4-5 million (estimated);
$2.1 million grant from Economic Development Administration.
Project category: Private company;
Project name and operating status: Valu-Net; Operational;
Project description and infrastructure scope:
Fiber-optic network serving over 305 businesses and over 400 residences
with Internet, telephone, and video in the 28,000 person town of
Emporia, Kansas; New infrastructure for last-mile service;
Project construction costs and federal funding:
$12-13 million (estimated);
No federal funding[C].
Project category: Private company;
Project name and operating status: Vermont Telephone Company;
Operational;
Project description and infrastructure scope:
Hybrid fiber-optic and wireless network serving businesses,
residences, a local energy utility, and community institutions in 14
Vermont villages with Internet, telephone, and video;
New middle-mile infrastructure using existing telephone utility
lines for middle-mile and last-mile service;
Project construction costs and federal funding:
$129.5 million, including $81.69 million USDA RUS grant, $35.01
million USDA RUS loan, $8.96 million NTIA BTOP grant.
Project category: Regional consortium;
Project name and operating status: Gold Country Broadband Consortium;
Planned;
Project description and infrastructure scope:
Broadband network for 5 counties in northern California to be built,
owned, and maintained by private Internet service providers using a
variety of technologies;
New middle-mile infrastructure for multiple private Internet service
providers to offer last-mile service;
Project construction costs and federal funding:
Construction cost estimates unavailable from sponsor;
No federal funding.
Project category: Regional consortium;
Project name and operating status: Microelectronics Center of North
Carolina (MCNC); Operational;
Project description and infrastructure scope: Fiber-optic, open access
network providing connectivity to 2,700 community institutions in 82
North Carolina counties, with capacity leased to a variety of private
telecommunications companies, cooperatives, and local government;
New middle-mile infrastructure for multiple private Internet service
providers to offer last-mile service to residences and businesses;
Project construction costs and federal funding:
$144 million;
$104 million NTIA BTOP grant.
Project category: Regional consortium;
Project name and operating status: MassBroadband 123; Operational;
Project description and infrastructure scope:
Fiber-optic, open access network serving 122 towns in western and
central Massachusetts over a middle-mile backbone that connects more
than 1,200 community institutions, including schools, libraries, and
hospitals; New middle-mile infrastructure for multiple private
Internet service providers to offer Internet, telephone, and video
services;
Project construction costs and federal funding:
$90 million (estimated);
$45.5 NTIA BTOP grant.
Project category: Regional consortium;
Project name and operating status: New Hampshire FastRoads;
Operational;
Project description and infrastructure scope:
Fiber-optic, open access network providing connectivity to 233
community institutions in 19 communities in western New Hampshire, and
1,300 homes and businesses in 2 towns, with last-mile capacity leased
to private providers; New middle-mile infrastructure to connect 19
towns, which can be expanded for last-mile service by private Internet
service providers;
Project construction costs and federal funding:
$7.6 million;
$5.4 NTIA BTOP grant.
Project category: Regional consortium;
Project name and operating status: Golden Bear Broadband - Northern
California Regional Middle Mile Infrastructure; Planned (Inactive as
of February 2014);
Project description and infrastructure scope:
Hybrid fiber-optic and wireless open access network for businesses,
residences, and community institutions in 16 counties in northern
California with Internet, future service was to include telephone
(through a 3rd party contracted company), and video; New middle-mile
infrastructure for multiple private Internet service providers to
offer service;
Project construction costs and federal funding:
$138 million (estimated);
No federal funding, although sponsors had planned to seek grants from
FCC's Connect America Fund and loans from USDA's Rural Broadband Access
Loan and Loan Guarantee Program.
Project category: Regional consortium;
Project name and operating status: Vermont Telecommunications
Authority; Operational;
Project description and infrastructure scope:
The state-chartered Authority provides grants using a variety of
technologies for open access middle and last-mile broadband projects
in unserved and underserved areas, which recipients use for broadband
expansion, cellular service infrastructure, and fiber-optic
infrastructure projects for businesses, residences, local government,
and community institutions; New middle and last-mile infrastructure
leased to multiple Internet service providers to offer service;
Project construction costs and federal funding:
$60 million (since 2007 inception, however besides deploying broadband
infrastructure, funds also have gone toward broadband mapping and
cellular projects);
$35.8 million in federal funding, including $33.4 million NTIA BTOP
grant, $1.6 million EDA grant,[D[ $219,898 Northern Borders Regional
Commission grant.
Source: GAO based on project sponsor interviews and documents.
[A] According to the Department of Energy, the "smart grid" is an
automated, widely distributed energy delivery network characterized by
a two-way flow of electricity and information made possible by
distributed computing and communications. Smart grid systems can
monitor everything from power plants to customer preferences and
individual home appliances, and they allow real-time information that
can better balance supply and demand.
[B] The FCC defines Broadband over Powerline (BPL) as the delivery of
broadband over the existing low-and medium-voltage electric power
distribution network and as having the following attributes. BPL speeds
are comparable to DSL and cable modem speeds, and can be provided to
homes using existing electrical connections and outlets. See
[hyperlink, http://www.broadband.gov/broadband_types.html].
[C] Valu-net received a low interest Small Business Administration loan
through a local bank.
[D] The Department of Commerce's Economic Development Administration
has programs that support the construction of public infrastructure,
which could include broadband infrastructure.
[End of table]
We compared existing broadband network speeds to those offered by
alternative fiber-optic networks for a sample of our case study
locations, as shown in table 3. We found that speeds for wired
services in some of our case study project areas varied depending on
the extent of fiber-optic technology deployed, and that alternative
network speeds were generally faster than speeds offered by existing
networks. Our results showed that some alternative networks offered
speeds substantially higher than existing networks, while for others
the differences were slight. Alternative network speeds differed less
from incumbent cable company network speeds than they did from
telephone company DSL networks. As shown, wireless service was
available in all the six areas, though speeds were much slower than
wired technologies. Because each of the six areas featured multiple
wireless providers, for our illustrative purposes, we chose the one
provider that served all areas, Verizon, for inclusion in the table.
Table 3: Selected Examples of Wireline and Wireless Broadband
Technology and Speeds for Alternative and Existing Networks:
Case study project network: Municipal: Greenlight;
Fiber-optic network;
Download: 100 Mbps-1 Gbps;
Upload: 100 Mbps-1 Gbps;
Existing wired networks:
@ Communications;
DSL network;
Download: 10-25 Mbps;
Upload: 1.5-3 Mbps;
Existing wired network: Centurylink;
DSL network;
Download: 10-25 Mbps;
Upload: 1.5-3 Mbps;
Existing wired network: Time Warner Cable;
Cable network;
Download: 50-100 Mbps;
Upload: 3-6 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 768 kbps-1.5 Mbps;
Upload: 200-768 kbps.
Case study project network: Municipal: Powellink;
Fiber-optic network;
Download: 10-25 Mbps;
Upload: 3-6 Mbps;
Existing wired networks: Centurylink;
DSL network;
Download: 10-25 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wired networks: CSC Holdings;
Cable network;
Download: 10-25 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 768 kbps-1.5 Mbps;
Upload: 200-768 kbps.
Case study project network: Municipal: Princeton;
Fiber-optic network;
Download: 1 Gbps +;
Upload: 1 Gbps +;
Existing wired networks: Comcast;
Cable network;
Download: 100 Mbps-1 Gbps;
Upload: 10-25 Mbps;
Existing wired networks: Frontier Communications;
DSL network;
Download: 3-6 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wired networks: MTCO;
DSL network;
Download: 6-10 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 10-25 Mbps;
Upload: 3-6 Mbps.
Case study project network: Private: Valu-Net;
Fiber-optic network;
Download: 50-100 Mbps;
Upload: 25-50 Mbps;
Existing wired networks: AT&T;
DSL;
Download: 10-25 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wired networks: Cable One;
Cable;
Download: 50-100 Mbps;
Upload: 1.5-3 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 10-25 Mbps;
Upload: 3-6 Mbps.
Case study project network: Regional: New Hampshire FastRoads;
Fiber-optic network;
Download: 5-50 Mbps;
Upload: 5-50 Mbps;
Existing wired networks: Comcast;
Cable network;
Download: 100 Mbps-1 Gbps;
Upload: 50-100 Mbps;
Existing wired networks: Fairpoint;
DSL network;
Download: 1.5-3 Mbps;
Upload: 768 kbps-1.5 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 768 kbps-1.5 Mbps;
Upload: 200-768 kbps.
Case study project network: Co-operative: Co-Mo Comm;
Fiber-optic network;
Download: 100 Mbps-1 Gbps;
Upload: 50-100 Mbps;
Existing wired networks: Centurylink;
DSL network;
Download: 10-25 Mbps;
Upload: 1.5-3 Mbps;
Existing wireless network: Verizon;
Mobile Wireless;
Download: 10-25 Mbps;
Upload 3-6 Mbps.
Source: GAO analysis based on data gathered from the National Broadband
Map and project sponsors.
[End of table]
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Mark Goldstein, 202-512-2834, or goldsteinm@gao.gov.
Staff Acknowledgments:
In addition to the contact mentioned above, Sally Moino, Assistant
Director; Amy Abramowitz; Gary Guggolz; Bert Japikse; Maureen Luna-
Long; SaraAnn Moessbauer; Joshua Ormond; and Hai Tran made key
contributions to this report.
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, § 6001(k)(1), 123 Stat. 115, 515-516 (2009).
[2] Federal Communications Commission, Connecting America: The
National Broadband Plan (Mar. 16, 2010).
[3] According to the National Broadband Plan, the availability of
satellite broadband service is not considered in determining whether
an area is served. The National Broadband Plan defines housing units
as a house, apartment, or single room, etc. that is occupied or
intended for occupancy as separate living quarters. The National
Broadband Plan, endnote 30.
[4] These estimates include capital expenditures and operating costs
to provide service minus anticipated revenues from service, and are
present value in 2010 dollars. See National Broadband Plan, p. 136-139.
[5] LTE is the standard created and adopted by the Third Generation
Partnership Project, a standards organization, and is the closest
standard to fourth generation wireless (4G) technology. LTE has been
accepted and adopted by national and international communities as the
foundation for future mobile telecommunications.
[6] Data transfer rates (speeds) vary depending on a number of factors
including the distance of users from core technology elements such as
nodes or cell towers and the number of users on shared networks among
other factors.
[7] According to FCC, nearly 100 percent of urban residents have
access to 3 Mbps or higher download speeds, and about 94 percent of
nonurban residents have access to such speeds as of December 2012.
[8] 47 U.S.C. § 1302(a).
[9] Programs include Economic Adjustment Assistance, Public Works,
Disaster Supplement Appropriations, Global Climate Change Mitigation
Incentive Fund, Community Trade Adjustment Assistance Program, and the
Disaster Relief Opportunity Fund. The focus of these programs is to
support economic recovery, promote regional competitiveness, or to
help areas recover from a natural disaster, rather than explicitly
fund the construction of broadband infrastructure.
[10] See [hyperlink, http://www.broadbandmap.gov]. The map is a joint
effort of NTIA and FCC to report broadband speeds and technology
available across the United States. According to NTIA and FCC, the map
represents the most comprehensive nationwide data on broadband
availability.
[11] Although FCC's broadband speed benchmark is 4 Mbps/1Mbps, FCC and
NTIA report on 3 Mbps download and 768 kbps upload because it is the
closest speed to the FCC benchmark about which data is collected for
the National Broadband Map.
[12] The U.S. Census Bureau defines a census block as a statistical
area bounded by visible features, such as streets, roads, streams, and
railroad tracks, and by nonvisible boundaries, such as selected
property lines and city, township, school districts, and county
boundaries. A block is the smallest geographic unit for which the
Census Bureau tabulates decennial census data. Many blocks correspond
to individual city blocks bounded by streets, but blocks--especially
in rural areas--may include many square miles and may have some
boundaries that are not streets.
[13] NTIA's definition of underserved is one in which (1) 50 percent
or less of households have access to the minimum broadband speed, (2)
no provider offers service speeds of at least 3 Mbps, or (3) 40
percent or less of the households choose to subscribe to a broadband
service. American Recovery and Reinvestment Act of 2009 (74 Fed. Reg.
33104, July 9, 2009).
[14] The federal USF includes four programs designed to ensure access
to affordable communications for schools, libraries, health care
providers, and rural and low-income consumers. The high-cost program
provides subsidies to telecommunications carriers that serve rural and
other remote areas with high costs of providing telephone service. The
other three USF programs are intended to reduce costs for low-income
consumers, schools and libraries, and rural health care providers.
[15] We have previously reported on FCC's efforts to reform the USF
high-cost program and create the Connect America Fund. See GAO,
Telecommunications: FCC Has Reformed the High-Cost Program, but
Oversight and Management Could be Improved, [hyperlink,
http://www.gao.gov/products/GAO-12-738] (Washington, D.C.: July 25,
2012).
[16] "Open access" generally refers to a structural requirement that
would prevent a broadband network provider from bundling broadband
service with Internet access from its own in-house Internet service
provider and would require the network provider to make its broadband
transmission capability available to independent Internet service
providers on a nondiscriminatory basis. Congressional Research
Service, Telecommunications Act: Competition, Innovation, and Reform,
RL33034 (Updated Jan. 13, 2006).
[17] Middle-mile infrastructure provides a link from the Internet
backbone to the last-mile networks of local providers (such as cable
or phone companies) that provide broadband service to end users. The
availability of broadband service to end users depends on access to
adequate middle-mile facilities, which can be costly to deploy in
rural areas. Middle-mile capacity, also known as "backhaul," refers to
the installation of a dedicated line that transmits a signal to and
from an Internet backbone that is typically located in or near an
urban area.
[18] According to the Department of Energy, a "smart grid" is an
automated, widely distributed energy delivery network characterized by
a two-way flow of electricity and information made possible by
distributed computing and communications. Smart grid systems can
monitor everything from power plants to customer preferences and
individual home appliances.
[19] he National Rural Electric Cooperative Association defines Rural
Electric Cooperatives as private, not-for-profit businesses governed
by their consumers (known as consumer-members), and lists two federal
requirements for all cooperatives, including electric cooperatives, as
(1) democratic governance and (2) operation at cost.
[20] The federal E-Rate program is one of four USF programs. It
assists eligible schools and libraries through discounted
telecommunications and information services. Discounts are available
for local and long-distance telephone service, Internet access, and
internal connection projects. See, e.g., In the Matter of Schools and
Libraries Universal Service Support Mechanism, 25 FCC Rcd. 18762,
18831-18850 (2010).
[21] According to a 2013 FCC report, a new generation of satellites
has greatly improved overall satellite broadband performance,
resulting in decreased latency and improved quality of service. FCC
reported that latency for satellites unavoidably remains much higher
than for terrestrial services, but with the improvements afforded by
the new technology, satellite service will support many types of
popular broadband services and applications. FCC, Measuring Broadband
America: A Report on Consumer Wireline Broadband Performance in the
U.S. (Feb 3, 2013).
[22] "State Restrictions on Community Broadband Services or Other
Public Communications Initiatives (as of May 2013)." The Baller Herbst
Law Group, Washington. D.C. May 2013.
[23] Cal. Govt Code § 61100 (af).
[24] National Broadband Plan, recommendation 8.19, page 153.
[25] A discussion of FCC actions that can help address National
Broadband Map accuracy is discussed later in this report.
[26] In the Matter of Connect America Fund, 26 FCC Rcd. 17663, 27 FCC
Rcd. 4040 (2011).
[27] Within the Connect America Fund, FCC created a Remote Areas Fund
with a budget of "at least $100 million annually" to ensure that even
Americans living in the most remote areas of the nation, where the
cost of providing terrestrial broadband service is extremely high, can
obtain service. FCC sought comment on various issues relating to the
fund, and in January 2013, FCC sought further comment on the design of
the fund. Id., 17657.
[28] USAC is an independent, not-for-profit corporation designated by
FCC as the USF administrator. USAC collects contributions from
telecommunications carriers and administers universal service support
payments.
[29] This funding was provided under "Phase I" of the Connect America
Fund to spur immediate broadband deployment to unserved locations.
Id., 17657. For more information on FCC's establishment of the Connect
America Fund, see [hyperlink, http://www.gao.gov/products/GAO-12-738].
[30] Only ETCs are allowed to receive financial support from the
Connect America Fund. ETCs are designated by their states or FCC and
have requirements that they must meet, including offering phone
service to all premises in the designated service area, reduced rates
for voice service plans for low-income populations, and the ability to
operate during emergencies. 26 FCC Rcd., 17673.
[31] See 47 U.S.C. § 214(e)(2), (e)(6).
[32] According to FCC officials, FCC has acknowledged that a provider
of Voice over Internet Protocol phone service can obtain the rights
available to telecommunications carriers under Title II of the
Communications Act if it voluntarily holds itself out as a
telecommunications carrier and complies with appropriate federal and
state requirements. IP-Enabled Services, 20 FCC Rcd. 10245, 10268
(2005).
[33] Locations served by existing providers are ineligible for support
from the Connect America Fund. According to FCC, over 80 interested
parties participated in the first challenge process to, for example,
challenge the status of a census block as shown on the National
Broadband Map.
[34] In the Matter of Technology Transitions, GN Docket No. 13-5 et
al., FCC 14-5, 2014 WL 407096 (F.C.C.) (January 31, 2014).The order is
aimed at allowing FCC and the public to evaluate how customers are
affected by the historic technology transitions that are transforming
voice communications from copper wires to an all-Internet Protocol
network using copper, co-axial cable, wireless, and fiber as physical
infrastructure.
[35] As of April 16, 2014, this draft notice of proposed rulemaking
was an agenda item for FCC's open meeting scheduled for April 23, 2014.
[36] FCC was named as a member of the working group established by
Accelerating Broadband Infrastructure Deployment, Exec. Order No.
13616, § 2, 77 Fed. Reg. 36903 (June 14, 2012).
[37] Other members of the Broadband Deployment on Federal Property
Working Group are the Departments of Defense, Interior, Agriculture,
Commerce, Transportation, and Veterans Affairs, and the U.S. Postal
Service.
[38] Intergovernmental Advisory Committee to the Federal
Communications Commission Policy Recommendation 2013-2 Regarding
Public-Private Partnerships in the Expansion of a World-Class
Broadband Infrastructure (Sharing of Federally-Funded Broadband).
Washington, D.C. January 7, 2013.
[39] See [hyperlink, http://www.broadbandmap.gov]. The National
Broadband Map reports maximum advertised speeds, not speeds actually
delivered. When cities are entered, as they were for our analysis, the
map displays providers offering service in the census block that is in
the center of that city.
[40] In the Matter of Connect America Fund, 26 FCC Rcd. 17663, 27 FCC
Rcd. 4040 (2011).
[41] In the Matter of Technology Transitions, GN Docket No. 13-5 et
al., FCC 14-5, 2014 WL 407096 (F.C.C.) (Jan. 31, 2014).
[End of section]
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